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Cost Management Pays Off As Co-op Bank Net Profit Jumps To Sh12 Billion

Co-op Bank Group CEO Dr Muriuki says the bank reported excellent efficiency gains from the various initiatives

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The Co-operative Bank Group has reported a profit before tax of Ksh16.4 billion for the first half of 2023, representing a 7.4% growth compared to Ksh15.3 billion recorded in the first half of 2022. The financial results translate to a profit after tax of Ksh12.1 billion, 5.25% up from Ksh11.5 billion reported in 2022.

Co-operative Bank Group Group Managing Director and CEO Dr Gideon Muriuki says the strong performance is in line with the banking group’s strategic focus on sustainable growth, resilience and agility.

Dr Muriuki said the Co-op Bank reported “excellent efficiency gains” from the various initiatives to attain a cost-to-income ratio of 46% in the half-year period from 59% in the financial year 2014 when it launched the growth & efficiency journey.

According to the half-year 2003 results, total assets grew to Ksh664.9 billion, a 10.1% improvement from Ksh603.9 billion in the same period last year. Net loans and advances grew to Ksh365.4 Billion, representing a 10.7% growth from Ksh330.1 billion in 2022.

Customer deposits grew to Ksh463.9 billion, a 9.7% increase from Ksh423.0 billion. External funds from development partners  expanded by 43.6% to Ksh59.4 billion from Ksh41.4 billion in 2022. Shareholders’ funds increased to Ksh108.3 billion, 11.9% growth from Ksh96.7 Billion in 2022.

Comprehensive Income

Total operating income grew by 3.0% from Ksh34.4 Billion to Ksh35.4 billion. Net interest income grew by 2.3% from Ksh21.1 Billion to Ksh21.5 billion. Total non-interest income grew by 4.0% from Ksh13.3 billion to Ksh13.8 billion.

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Total operating expenses decreased by 0.1% from Ksh19.2 billion to Ksh19.1 billion. Credit Management remains a key focus area, with the Group prudentially making provisions of Ksh2.9 billion, which has enhanced the bank’s Loan Loss Reserve/Coverage levels to 71.1%.

Subsidiaries

Co-op Consultancy & Bancassurance Intermediary Ltd posted a profit before tax of Ksh591.3 million, riding on strong penetration of bancassurance business.

Meanwhile, Co-operative Bank of South Sudan which is a unique joint venture (JV) partnership with Government of South Sudan (Co-op Bank 51% and GOSS 49%) made a profit before tax of Ksh205.1 million. This performance, however, translated to a monetary loss of Ksh36.5 million attributable to hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.

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At the other end, Co-op Trust Investment Services Ltd contributed Ksh106.8 Million in profit before tax in Q22023, an impressive 25% growth. The subsidiary has funds under management of Ksh197.3 billion. Kingdom Bank Limited (a niche MSME Bank) contributed a profit before tax of Ksh521.9 million, a remarkable growth of 29% from Ksh405.9 Million reported last year.

Dr Muriuki says Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors. “This is anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, and the unique synergies in the over 15-million-member co-operative movement that is the largest in Africa,” he said.

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BILL YAURA
BILL YAURA
Bill Yaura is a Correspondent for Business Today. He can be reached on email: [email protected]
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